French Connection says high-street trading remains tough

* FY loss at 0.8 mln stg vs loss of 4.4 mln stg last yr

* FY revenue drops 5.8 pct to 178.5 mln stg

* Shares (Berlin: DI6.BE - news) fall as much as 19 pct (Adds details, comments from analyst and Operations Director; updates share price)

By Aastha Agnihotri

March 17 (Reuters) - French Connection Group Plc said trading on high street remained challenging, after the British retailer reported a smaller full-year loss.

Shares of the 43-year-old fashion group fell as much as 19 percent on the London Stock Exchange (Other OTC: LDNXF - news) on Tuesday.

Despite tentative signs of recovery in Britain's economy, consumers are feeling the pinch as wages have failed to keep pace with inflation.

Clothing retailers endured a particularly tough second half as milder-than-expected weather discouraged shoppers from buying winter clothes.

"If we look at the industry data that is coming out, you don't think that there's a surge in consumer demand going on, Operations Director Neil Williams told Reuters.

"It's certainly not on the fashion high street."

French Connection (LSE: FCCN.L - news) said wholesale revenue, which comes from its sales to retailers in 60 countries around the world, rose 4.6 percent to 75.2 million pounds. The wholesale segment accounts for about 40 percent of total sales.

The company said it was encouraged by forward orders in its wholesale business but Cantor Fitzgerald analyst Freddie George noted the language was more muted than in its November 2014 trading statement.

French Connection reported an underlying operating loss of 0.8 million pounds ($1.2 million) for the year ended Jan. 31, compared with the loss of 4.4 million pounds a year earlier. Revenue fell 5.8 percent to 178.5 million pounds.

The company's shares were down 18 percent at 50.04 pence at 1010 GMT. ($1 = 0.6741 pounds) (Editing by Gopakumar Warrier and Anupama Dwivedi)